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V1086-17 9 May 2017 · SG de Fiscalidad Internacional Criterion in force
IRNR · prima de emisión

Parent-Subsidiary Directive exemption applies only to the portion of share premium derived from profits

A Spanish company with a sole shareholder in the Netherlands has requested a ruling on whether the distribution of a share premium (arising from a demerger) is exempt under the Parent-Subsidiary Directive. The Directorate General for Taxes (DGT) has ruled that the exemption only applies to the portion of said premium that corresponds to reserves derived from profits.

The question raised

Would the distribution of the share premium by the taxpayer fall within the scope of application of Article 14.1.h) of the Recast Text of the Non-Resident Income Tax Law?

The DGT's ruling

The exemption under Article 14.1.h) of the TRLIRNR requires that the amounts be distributed profits. In the case of a share premium arising from a spin-off, a distinction must be made between the portion corresponding to reserves derived from profits and the portion corresponding to capital or the original share premium. Only the portion derived from profit reserves may qualify for the exemption, provided that the requirements of Directive 2011/96/EU are met.

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